Correlation Between Petroleo Brasileiro and Fuller Thaler

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Fuller Thaler at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Petroleo Brasileiro and Fuller Thaler into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Fuller Thaler Behavioral, you can compare the effects of market volatilities on Petroleo Brasileiro and Fuller Thaler and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Petroleo Brasileiro with a short position of Fuller Thaler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Fuller Thaler.

Diversification Opportunities for Petroleo Brasileiro and Fuller Thaler

-0.18

Correlation Coefficient

Petroleo Brasileiro  Fuller Thaler

Good diversification

The 3 months correlation between Petroleo and Fuller is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Fuller Thaler Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuller Thaler Behavioral and Petroleo Brasileiro is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Petroleo Brasileiro Petrobras are associated (or correlated) with Fuller Thaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuller Thaler Behavioral has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Fuller Thaler go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Fuller Thaler

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 2.78 times more return on investment than Fuller Thaler. However, Petroleo Brasileiro is 2.78 times more volatile than Fuller Thaler Behavioral. It trades about 0.18 of its potential returns per unit of risk. Fuller Thaler Behavioral is currently generating about 0.02 per unit of risk. If you would invest  1,362  in Petroleo Brasileiro Petrobras on September 12, 2024 and sell it today you would earn a total of  98.00  from holding Petroleo Brasileiro Petrobras or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Fuller Thaler Behavioral

Petroleo Brasileiro

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Fuller Thaler Behavioral

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuller Thaler Behavioral are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fuller Thaler is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Fuller Thaler

The main advantage of trading using opposite Petroleo Brasileiro and Fuller Thaler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Fuller Thaler can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fuller Thaler will offset losses from the drop in Fuller Thaler's long position.

The idea behind Petroleo Brasileiro Petrobras and Fuller Thaler Behavioral pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.